Amazon is set to introduce a buy now, pay later checkout option for small business owners utilizing its online store. The partnership with Affirm will extend to Amazon Business, catering to companies. This move led to a more than 14% increase in Affirm shares. The service, offering loans ranging from $100 to $20,000, will be accessible to eligible customers by November 24, or Black Friday. Specifically designed for sole proprietors, the most common form of business ownership in the US. The emergence of this fintech feature gained popularity during the early stages of the pandemic. Affirm and Klarna, the leading players in this field, experienced a surge in valuations. However, the industry suffered a decline as interest rates rose and borrowers started to default. Nevertheless, users are drawn to the transparency of this payment option compared to credit cards, as they are aware of the interest upfront. Todd Heimes, director of Amazon Business Worldwide, expressed the company’s motivation to offer diverse payment solutions to small businesses. Amazon Business was established in 2015 to meet the demand from businesses for office supplies and bulk purchases. With sales reaching $35 billion this year and boasting over 6 million customers worldwide, the division has grown significantly. If approved, users will have the option to make equal installment payments over a span of three to 48 months, with an annualized interest rate ranging from 10% to 36%, depending on the perceived risk of the transaction. It is worth noting that there are no late or hidden fees associated with this service. Wayne Pommen, Affirm’s Chief Revenue Officer, emphasized that the financial industry often neglects to provide credit to small businesses. By offering this payment solution, Affirm aims to assist businesses in their growth and cash flow management. This partnership is a crucial development for Affirm, as it seeks revenue growth after the decline in demand for Peloton bikes. Affirm initially introduced installment loans to Amazon’s retail customers in 2021, expanding to Amazon in Canada the following year, and later integrating with Amazon Pay. Starting with sole proprietors, Affirm plans to assess the product’s performance before potentially expanding it to a wider range of businesses. With 28 million registered sole proprietors in the US, Pommen believes this target market holds great potential for success.
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